Spectrum and its parent, Charter Communications, are showing signs of weakness, and Wall Street is raising concerns.
According to Investing.com, analysts at Wells Fargo and JP Morgan cut Charter’s stock on Monday. Both banking institutions cited the company’s financial and customer losses, poor growth, high prices, industry competition, and the Affordable Connectivity Program’s uncertain future.
Cord cutting has disturbed the foundation of the cable TV industry. Cord Cutting 2.0, in which customers cut the cable internet cord in favor of more wireless options such as 5G home internet, is also causing cable companies significant hardship. According to the article, JP Morgan’s rating revision was motivated in part by the rising availability of 5G home internet.
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A Charter spokesperson could not be reached for comment. On Friday, Charter CEO Christopher Winfrey underlined that the impact of 5G is “temporary.”
However, that same day, the Charter produced some depressing consequences. Spectrum lost an additional 320,000 TV customers in the fourth quarter of 2023. The corporation also lost more than 251,000 call customers and, for the first time, 61,000 internet subscribers. In total, Spectrum lost about 1,018,000 million users by 2023.
JP Morgan predicts a net loss of 100,000 broadband subscribers this year, compared to the 150,000 subscribers that the bank previously predicted Charter would gain.
That gets at the heart of the cable industry’s argument that, while cord cutting may harm its TV business, consumers will still want to continue with them for high-speed internet. That has not been the case so far.
According to the research, Wells Fargo changed Charter’s rating from Overweight to Equal Weight and reduced its price objective from $460 to $340. JP Morgan downgraded the company’s stock recommendation from Overweight to Neutral, and from $445 to $370.
Spectrum is not the only corporation struggling. Comcast’s 2 million cable customer loss in 2023 resulted in it being dethroned as the top cable TV provider in the United States. Spectrum topped the list, but only because it lost fewer subscribers than its rival.
JP Morgan and Wells Fargo were not immediately available for comment. Spectrum has declined to comment.
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